Financial Analysis of Integrated Media Technologies Ltd: Report

This report provides a comprehensive financial analysis of Integrated Media Technologies Ltd, covering key aspects such as capital structure, cost of debt and equity, and weighted average cost of capital (WACC). The analysis includes an evaluation of the company's short-term and long-term debts, consistency of its debt structure, and computation of the cost of debt and equity. The report also examines the company's revenue, earnings, EPS, dividends, and growth expectations, along with the computation of the PE ratio and comparable values. Furthermore, it delves into the calculation of WACC, the impact of tax rates, and the rationale behind differences in the cost of debt and equity. The report also considers the relevance of current liabilities, the major values in WACC calculations, and the company's use of WACC in investment decisions. Finally, it analyzes the company's capital structure in relation to industry standards, market analysis, and the company's uniqueness, concluding with an overview of the company's financial health and recommendations for improvement.

RUNNING Head: Financial analysis of Integrated Media Technologies Ltd
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Name of the student
Topic- Financial analysis of Integrated Media Technologies Ltd
University name

Financial analysis of Integrated Media Technologies Ltd
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Executive summary
This report has shown the clear understanding on the capital structure of the company and
how company could maintain effective capital structure. It is evaluated that there are several
financial tools which could be undertaken for evaluating the business functioning and growth of
business.

Financial analysis of Integrated Media Technologies Ltd
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Table of Contents
Executive summary............................................................................................................4
Introduction.......................................................................................................................5
Answer to question-1.........................................................................................................5
Short term and long term debts of company...................................................................5
Consistency of debt structure of company.....................................................................6
Company and industry operates its debt to influence the proportion of short-term to
long-term debts.......................................................................................................................... 6
Computation of cost of debt...........................................................................................7
Answer to question no-2....................................................................................................8
Company’s cost of equity...............................................................................................8
Evaluate and discuss your company’s revenue, earnings, EPS, dividends and growth
Expectations...............................................................................................................................8
Growth expectation of company....................................................................................9
Computation of PE ratio.............................................................................................. 10
Comparable value........................................................................................................ 10
Additional data and information would be preferred to value of the assets..................11
Answer to question no-3..................................................................................................12
Computation of weighted average cost of capital.........................................................12

Financial analysis of Integrated Media Technologies Ltd
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Explanation of tax rate in relation to WACC...............................................................12
Why there is difference in cost of debt and cost of equity............................................12
Should current liabilities be included in cost of capital?..............................................13
Major value of the WACC calculation.........................................................................13
Integrated Media Technologies Ltd has used WACC in investment decision..............13
Capital structure of company with the relevancy of the industry.................................14
Capital structure and what economic circumstances....................................................14
Answer to question-4.......................................................................................................16
Market analysis............................................................................................................16
Current literature search...............................................................................................16
Uniqueness of Integrated Media Technologies Ltd......................................................16
Conclusion........................................................................................................................17
References....................................................................................................................... 18
Integrated........................................................................................................................ 18

Financial analysis of Integrated Media Technologies Ltd
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Financial analysis of Integrated Media Technologies Ltd
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Introduction
In this report, financial analysis and computation of weighted average cost of capital has
been taken into consideration. There are several points which are included by company while
evaluating its business performance and optimum capital structure.
Present details of Integrated Media Technologies Ltd
Integrated Media Technologies Ltd is a technologies investment, product development and
distribution company. This company has been running its business on international level
Answer to question-1
Short term and long term debts of company
After evaluating the annual report of company, it is considered that Integrated Media
Technologies Ltd was not having short term debts in 2015 and after that it increased its short
term debt to AUD $ 4 million. However, company has maintained AUD $ 3 million short term
debt as compared to industrial average debt (Integrated Media Technologies Ltd, 2016).
Particular 2015 2016 Industrial average debt
AUD in
Million AUD in Million AUD in Million
Short term debts 0 4 7
Long term debts 24 21 27

Financial analysis of Integrated Media Technologies Ltd
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Consistency of debt structure of company
The debt and equity structure of company is very viable and has increased its total debt by
approximately AUD $ 1 million in one year. In addition to this, equity capital of company has
also increased through the time. Company has lower equity capital as compared to industrial
average debt. However, debt to equity consistency of company is not effective and company has
high financial leverage (Integrated Media Technologies Ltd, 2016).
Particular 2015 2016 Industrial average debt
$"00
0 $"000
Total debts 24 25 34
Equity share capital 11 14 20
Total capital 35 39 54

Financial analysis of Integrated Media Technologies Ltd
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Company and industry operates its debt to influence the proportion of short-term to
long-term debts
Integrated Media Technologies Ltd has zero level of short term debt in 2015 which increased to
AUD $ 4 million in 2016. However, company still has maintained low level of short term debts
as compared to its industrial average debt. In addition to this, to match with the industrial
average debt, company should have increased its long term debt but due to high financial
leverage company has reduced its long term debt to AUD $ 21 million (Integrated Media
Technologies Ltd, 2016).
Particular 2015 2016 Industrial average debt
$"00
0 $"000 $"000
Short term debts 0 4 7
Long term debts 24 21 27
Computation of cost of debt
Computation of cost of debt is 6%
Computation of cost of debt Amount

Financial analysis of Integrated Media Technologies Ltd
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Interest payment 8
Long term debt and short term
debt 227
Tax payment 30%
Cost of debt 3%

Financial analysis of Integrated Media Technologies Ltd
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Answer to question no-2
Company’s cost of equity
Cost of equity – It is the amount of payment which is required to be made to equity investors for
their capital. It could be computed as below (Rau and Spinler, 2017)
Cost of equity= RF+(RM-RF)Beta
(Integrated Media Technologies Ltd, 2016).
Computation of cost of equity of company
CAPM
Risk free rate 1.58%
Market rate 15%
Beta 0.04591625
CAPM 2.20%
(Bloomberg, 2017).

Financial analysis of Integrated Media Technologies Ltd
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Evaluate and discuss your company’s revenue, earnings, EPS, dividends and growth
Expectations.
The revenue of company has increased by 100% in 2016 as compared to last year data. In
addition to this, company has also increased its earning to ADU $ 4 million which is 100 % more
as compared to last year data. There is only .17 points changes in its EPS in 2016 as compared to
2015. This has shown that company has increased its business efficiency with a view to increase
its overall earning.
Particular (AUD in million) 2015 2016
Revenue 7 14
Earning 2 4
EPS 1.2 1.37
Dividend 0 0
(Integrated Media Technologies Ltd, 2016).

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Growth expectation of company
Integrated Media Technologies Ltd has shown increasing trend of its revenue. On the basis of
past data, company has expectation of increase in its revenue to AUD $ 31.8 million in 2020
(Kundakchyan and Zulfakarova, 2014).
Growth Expectation
Amount of revenue based on
trend
2014 0
2015 1
2016 1
2017 7
2018 14
2019 14.8
2020 18.2
2021 21.6